He advocated strengthening bank regulations to avoid similar incidents in the future. Barr also said: "We will continue to closely monitor the status of the banking system and, if necessary, prepare to use all necessary tools to ensure the safety and soundness of the system." The Fed has launched an investigation into the collapse of SVB and is scheduled to release a report on May 1. But Barr has said that SVB has made a number of key mistakes in its development in recent years.

 

Fed Governor Jefferson said on Monday that the transfer of deposits from small and medium-sized banks to large banks may have a disproportionate impact on small U.S. businesses that rely heavily on credit from community and regional financial institutions.

 

"We are concerned about the general manager, but also understand the distributional issues that may arise if depositors move their deposits away from smaller banks," he said in a speech prepared at a Virginia university.

 

The sudden pressure on the banking sector to become more cautious raises the prospect of a credit slowdown, especially to smaller financial institutions, which are seen as most vulnerable to a run like that at SVB.

 

Fed data show that after the collapse of SVB on the 10th, the rate of deposit loss from small US banks hit a record high. Deposits at small U.S. banks outside the largest 25 U.S. commercial banks fell by $119 billion in the week ended March 15.

 

Jefferson also said that U.S. inflation has begun to slow, but it is unclear how much is due to rising interest rates.

 

He said the moderation in inflation was partly due to tighter monetary policy and partly due to other factors such as easing supply chain bottlenecks and lower energy prices.

 

Still, Jefferson said inflation was "too high" and he wanted to see inflation return to the 2 percent target "sooner rather than later."

 

Fed Governor Jefferson said the transfer of deposits from small and medium-sized banks to large banks could have a disproportionate impact on small U.S. businesses that rely heavily on credit from community and regional financial institutions. Reuters

 

Liang Naili promised to take again, if necessary, the actions to rescue unsecured deposits after the collapse of two medium-sized banks, SVB and Signature Bank, two weeks ago, and emphasized the importance of small and medium-sized banks.

 

Federal Reserve Vice Chairman Barr criticized SVB's "centralized business model" as "a classic case of mismanagement." 

(Source money.udn0328) ☺